How Will The Death of The American Dream Impact Insurers?

A snapshot of the future from the Editor’s keyboard;

America isn’t the country it was, where anyone can make it through hard work, enterprise and careful investment. It also has deep social divisions, rising crime in democrat controlled cities and an inability to face up to competition from China as the world’s pre-eminent power. At street level, there is an epidemic of substance abuse, which is rarely talked about, but affects millions of US citizens. Will this rise in substance abuse and mental health issues cause major problems for the insurance sector in the US market and what can be done about it? IE asks the question after reading a report by Moody’s, which looks at some of the key trends.

For example, “medical conditions related to behavioral health – which includes both mental health and substance abuse – are widespread and growing in the US, and have been exacerbated by the pandemic.” says Moody’s, adding; “Overall US medical costs, which totaled $4.1 trillion in 20201 have been steadily rising in recent years. Average annual medical costs for those with behavioral health conditions are 3.5x higher than for those without such conditions, according to one study.”

THE DEATH OF THE AMERICAN DREAM?

Behavioral and mental health issues are widespread and take a high economic toll, according to the National Survey on Drug Use and Health. In 2020, 73.8 million Americans (adults aged 18 or over) had either mental illness or a substance use disorder. Between 2010-18, the number of adult Americans with major depressive disorder increased 12.9% to 17.5 million, with an increasing share between the ages of 18-34. The overall economic cost of major depressive disorder increased 37.9% over this period to $326.2 billion from $236.6 billion.

Across the US in the last decade or so, you see a more polarized society, where race, gender and political opinions have become grounds for online hate, cancel culture, riots or physical assaults. Wealth is being concentrated in a narrow, Hunger Games elite at the very top, while poorer people can find very few ways to achieve a middle class lifestyle. In fact, the idea of joining the entrepreneurial middle class itself is being destroyed some say, by woke Universities, automated systems that require fewer managers, plus overseas competition on manufacturing, distribution and services.

INSURANCE INDUSTRY AT THE CROSSROADS

Moody’s notes; “Data indicates that mental health issues were further exacerbated by the pandemic. Ultimately, if the (insurance) industry fails to produce better outcomes and contain costs, it will invite renewed attempts at political solutions, which often pose risks. Behavioral and mental health problems result in higher medical costs. Individuals with behavioral health conditions are generating a much higher level of medical claims than those without such conditions. Milliman’s 2020 study, cited above, concluded that individuals diagnosed with behavioral health conditions incurred annual costs of $12,272 compared to $3,552 for those without behavioral health issues.”

Another thing to consider is that those who feel left out of mainstream society will commit crimes to better their situation. This crisis has an impact for every business, every homeowner, every driver.

IE can see the day when medical cover is restricted in certain zones, cities and States, by T&Cs that specifically exclude treatment for mental health problems. That has wider implications for the USA itself as a society fragments into a mixture of tent/RV dwellers living out a meagre existence on the margins, watching the comfortable lifestyle of an elite and their public sector enabling class of administrators.

If big insurance brands are going to develop public-private partnerships on green infrastructure investment, spending billions of pension & life contributions on utopian wind turbines and vehicle battery factories, they should consider the other side of the social justice coin. You can’t build a green utopia if there are crazed drug addicts surrounding your new affordable, eco-friendly apartment blocks.

If you want a glimpse of how bad things can get, watch this ABC news report on San Francisco.